Field Reports

Kmart's current chairman, Edward S. Lampert will be the chairman of Sears Holding and will be joined in an Office of the Chairman by Alan J. Lacy, Sears' chairman and chief executive officer.

"The combination of Kmart and Sears is extremely compelling for our customers, associates and shareholders as it will create a powerful leader in the retail industry, with greatly expanded points of distribution, leading proprietary home and apparel brands and significant opportunities for improved scale and operating efficiencies," said Lampert. "The merger will enable us to produce a higher return than either company could achieve on its own."

The merger is expected to reach completion in March 2005, but it is still subject to approval by Kmart and Sears stockholders, regulators and other closing conditions.

Fast White, Pounds Off Patch Maintain Innocence in FTC Investigation

WASHINGTON, D.C. — The Federal Trade Commission (FTC) filed complaints against Conversion Marketing Inc., doing business as National Health Support Center, Natural Bright and Pounds Off Patch as well as Adam Tyler MacDonald doing business as Fast White, tooth-whitening product. The Commission alleges that the companies falsely promoted free trial offers and violated electronic debiting laws.

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The Santa Ana, Calif. and North Salt Lake, Utah-based companies promised "free samples" of trial products, but then debited credit card and checking accounts and enrolled consumers in continuity programs without the their knowledge or consent, according to the FTC's complaint, which was filed in the U.S. District Court, Central District of Calif. in October.

The product offers were disseminated through outbound telemarketing calls, television, radio and Internet advertisements. Consumers complained that they received debits and credit card charges for shipments that were never requested.

According to the complaint, MacDonald (whose company, Take2Direct, provides Response with material for its "From the Lab" research section) began promoting Fast White through Test Marketing Group LLC (TMG), now defunct due to bankruptcy, and improperly acquired consumers' debit and credit account information from third parties.

The Commission alleges that MacDonald continued to use the same telemarketing methods at Conversion Marketing to entice consumers with "free samples" of the Pounds Off Patch.

MacDonald claims that the debiting issues arose in February 2003 when he contracted with another company to sell Fast White.

"The allegations brought against us by the FTC are more of a matter of mistaken identity than anything else," MacDonald says. "Neither I nor my company have ever charged any consumer's credit card without recorded confirmation of the validity of the sale. The sales that are being investigated originated from another call center operation whom we expected to operate with honesty; we soon discovered that the recorded confirmations of the sales by this call center that were delivered to us for fulfillment, even though they were verified by a third party, were somehow falsified."

Four violations of the Telemarketing Sales Rule (TSR) listed in the complaint include: engaging in unauthorized billing; not telling the consumers that their accounts would be debited unless they proactively avoided charges; failing to state the total cost of the products; and receiving unencrypted account information.

"We are happy that we have every piece of information necessary to prove to the FTC, and to the industry as a whole, that we are certainly innocent of these charges, and that we are more excited than ever to bring excellent services to our clients," MacDonald says.

Holiday Shoppers Still Charged About Consumer Electronics

Forty-six percent of the respondents believe they will spend more on CE products this year than last — 16 percent higher than those who said they would spend more on such products in August.

So which products are in greatest demand? The results show that for three years now, digital cameras (22 percent) are still ranked the No.1 item consumers are most likely to buy. The report states, however, that although digital cameras are still the most desirable CE products, sales are 9 percent lower than the rampant sales one year ago.